Tanzania: State Mulling New Gas Plant to Counter High Fuel Costs

Text of report by Christine Afandi entitled: “Dar to spend $35m on natural gas project” published by Kenyan newspaper The EastAfrican website on 15 July

The Tanzanian government will spend 35m-dollars to set up a natural gas project in Dar es Salaam to solve the country’s fuel crisis. The natural gas project is scheduled to take off early next year.

The government through Tanzania Petroleum Development Corporation (TPDC) will first start the project in Dar es Salaam before rolling out to other parts of the country as a long term measure to cushion the economy against the effects of high fuel prices.

Adam Malima, deputy minister for energy and minerals, said the project will be implemented in two phases and will be completed in March 2009. Mr Malima said TPDC and a company from China, Ultimate Petroleum Technology, are already working on the first phase, which is a pilot project that will involve institutions and homes in a selected area as well as vehicles. “We will start with 73 residential houses located in Mikocheni [in Dar es Salaam], 200 vehicles and institutions, including hospitals and hotels”, he said.

TPDC has already ordered for equipment from abroad for installation at the project’s base at Ubungo, a suburb of Dar es Salaam that also houses the Tanesco [Tanzania Electric Supply Company Limited] headquarters and power station. The equipment include fuel dispensers, compressors, compressed natural gas transporting trailer and storage vessels.

According to Mr Malima, TPDC and Ultimate Petroleum Technology have been working together on the project since July last year. In the first phase, construction of a compressor station and two gas stations where vehicles will fuel will cost 3m-dollars. The ultimate goal is to put in place infrastructure for distribution and supply of piped/compressed natural gas to institutions, residential houses and gas stations.

Mr Malima said TPDC will spend another 32m-dollars in the implementation of the second phase. He added that the second phase will require 32m-dollars and involve 8,000 vehicles, 30,000 houses and gas pipes that will cover 45 km in addition to more networks that will be used to distribute the gas.

Dependence on charcoal and wood fuel, imported liquid petroleum gas (LPG) and petroleum will be reduced, subsequently helping to reduce further deforestation and air pollution.

Going by the current statistics available, a total of 20 manufacturing industries in Dar es Salaam have substituted petrol with natural gas, which is supplied from the Songo Songo [along the Tanzanian coast] gas fields.

Joyce Kisamo, director of marketing and investment at TPDC, said they are also working on a study to configure vehicles that use diesel to be using natural gas.

Ms Kisamo said the government needs to provide incentives to make use of compressed natural gas appealing to both customers and investors.

These incentives include import duty relief on machinery and equipment.

Originally published by The EastAfrican website, Nairobi, in English 15 Jul 08.

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